Car Affordability Calculator: How Much Car Can I Afford?
Start from the monthly payment you are comfortable with and work back to the highest car price it covers, after your down payment, trade-in, sales tax and fees.
Work backward from the payment. At 7% for 60 months, a $500 monthly payment supports a loan of about $25,251. Add a $3,000 down payment, take out $500 of fees and 6% sales tax, and it covers a car priced up to about $26,180. You would pay about $4,749 in interest over the five years.
This calculator gives an estimate for general education only. It is not financial advice or a loan offer. It assumes a fixed rate and equal monthly payments, uses the tax and fees you enter, and does not include insurance, registration renewals, fuel or maintenance. Lenders set their own rates and terms. Talk to a lender or a qualified financial professional before you commit to a purchase.
Most car you can afford
$26,180
- Sales tax
- $1,570.80
- Amount financed
- $25,250.80
- Monthly payment
- $500.00
- Total interest
- $4,749.20
- Total of payments
- $30,000.00
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About the Car Affordability Calculator
A dealer quotes a monthly payment, but the number that decides whether a car fits your budget is the price, and the two are linked by the loan math. Each monthly payment is worth less today than its face value because part of it is interest, so the loan a payment supports is the present value of all the payments at your monthly rate, which is the annual rate divided by 12. That is why the same $500 a month buys less car at a higher rate or a shorter term. From that loan amount the calculator adds your cash down payment and trade-in, takes out fees, and removes sales tax, which rises with the price itself. Most states tax the price after subtracting the trade-in, which is worth real money: on a $5,000 trade at 6% it saves $300 of tax. If your state taxes the full price, untick the box. A longer term raises the price you can pay but also the interest, so check the total interest line before stretching to 72 or 84 months. Insurance, fuel and repairs are not part of the loan, so leave room for them in your budget.
Frequently asked questions
How much car can I afford with a $500 monthly payment?+
At 7% for 60 months, $500 a month supports a loan of about $25,251. With $3,000 down, $500 of fees and 6% sales tax, that is a car priced up to about $26,180. At 4% the same payment reaches further, and at 10% it buys less.
Does a longer loan term let me afford more car?+
It raises the price the payment covers, because the payments are spread over more months, but it also raises the total interest and keeps you owing more than the car is worth for longer. Compare the total interest at 60 and 72 months before choosing.
How is sales tax handled with a trade-in?+
In most states you pay tax only on the price minus the trade-in value, so a trade-in lowers your tax bill as well as the amount you borrow. A few states tax the full price; untick the box to match that. Check your state's rule before you buy.
Is this what a lender will approve?+
No. Your rate and term depend on your credit, the car's age and the lender. Use this to set a price ceiling for shopping, then compare real loan offers, including one from your bank or credit union, before you sign at the dealer.
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